Why didn't Pittsburgh go bankrupt? What the Steel City did that Detroit didn't

The Detroit skyline is seen from Grand River on Thursday, July 18, 2013, in Detroit. On Thursday the city became the largest city in U.S. history to file for bankruptcy when State-appointed emergency manager Kevyn Orr asked a federal judge for municipal bankruptcy protection. (AP photo)

DETROIT, MI -- As factories closed and jobs disappeared from the Motor City, the same happened in the Steel City.

While industry diversification and state oversight are relatively new developments in Detroit, they've been happening for years in Pittsburgh.

"As steelmaking crumbled under pressure from foreign imports and the decline of the U.S. auto industry, (Pittsburgh's) population dropped by more than 40 percent between 1970 and 2006," reports the New Pittsburgh Courier, one of several Pennsylvania news outlets that have been exploring the issue since Detroit became the largest American city ever to file for Chapter 9 bankruptcy protection last week.

"But during those years, Pittsburgh also forged a new identity around health care and technology. It retrained former steelworkers, invested heavily in higher education and launched a controversial campaign to redevelop more than 1,000 acres of industrial Brownfields, replacing decaying lots with luxury homes, office and retail buildings, and 27 miles of riverfront parks."

Pittsburgh also came under state fiscal oversight in 2004.

State intervention in Detroit began last year, and intensified in March with the appointment of Emergency Manager Kevyn Orr, a bankruptcy lawyer whose estimates the debt at over $18 billion.

"Ten years ago, Pittsburgh's credit rating was at junk bond status," reports the Pittsburgh Tribune-Review. "It since has risen to an A rating from the nation's leading rating agencies. Its population bottomed out at 305,704 in 2010 and has increased to 306,211, according to 2012 U.S. Census estimates.

"... The city in 2012 borrowed for the first time in six years when it issued $80 million in bonds for capital improvements. It plans to borrow again in 2015."

Time magazine points out the difficulty of diversifying an economy so deeply rooted in a single industry:

"The switch from a manufacturing economy to a mixed technology economy is difficult, because steelworkers or autoworkers can’t become tech workers overnight — or ever in many cases. In Pittsburgh, the process is still evolving. Consider that the downtown didn’t see a new office building constructed for about 20 years after the mid 80s collapse. And it still shares problems with many old northeastern manufacturing centers: huge pension and healthcare obligations, a smaller, older population, and pockets of poverty."

Economist Paul Krugman in a New York Times column analyzed job sprawl statistics in the two cities, which demonstrate how the spread of industrial hubs into the suburbs may have hindered Detroit's ability to evolve.

"Less than a quarter of Detroit jobs are within 10 miles of the traditional central business district, versus more than half in Pittsburgh," he wrote.

"... It’s hard to avoid the sense that greater Pittsburgh, by taking better care of its core, also improved its ability to adapt to changing circumstances. In that sense, Detroit’s disaster isn’t just about industrial decline; it’s about urban decline, which isn’t the same thing. If you like, sprawl killed Detroit, by depriving it of the kind of environment that could incubate new sources of prosperity."